Growing Your Small VAR Business: 5 Ways To Get To $10 Million

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Starting a company isn't easy. But talk to entrepreneurs, including those who have built solution provider businesses, and most will tell you the real challenge comes when a company is trying to grow beyond its first $2 million or $3 million.

Entrepreneurs, as well as analysts and academics who think about this stuff, say a number of hurdles can hinder a company's growth -- or even lead to its demise -- before it can reach $10 million or $20 million in sales. Loss of focus on what made a startup successful, failure to implement core business processes, poor marketing efforts, and the inability of the enterprise's founder to delegate authority can doom a startup to small-company purgatory.

"Only 4 percent of startups get above $1 million," Verne Harnish, a consultant and author of "Mastering The Rockefeller Habits: What You Must Do To Increase The Value Of Your Fast-Growth Firm," said in an interview. And only four-tenths of 1 percent succeed in growing beyond $10 million in annual sales.

Certainly, outside forces such as a recession or a sudden market shift can throw a monkey wrench into any startup's growth plans. But often the impediment to growth is the founder/entrepreneur himself who fails to recognize when it's time to begin hiring people to manage some business operations so he can focus on core priorities such as product development or planning the company's long-range strategy. "The entrepreneur can't get out of the way. They are used to being in the center of everything and they can't let go. So the CEO becomes the bottleneck to the whole thing," said Mark Helow, founder and managing partner of 10X CEO, an organization that develops training programs and other resources for business leaders.

Through interviews with experts such as Helow and solution providers who provide firsthand insight into building a business, CRN pinpointed five common mistakes that can stifle a company's growth.